Aussie Dollar Takes Lead, Japanese Holiday Saps Liquidity

The Aussie dollar clawed back its opening losses and climbed to the top of the G10 scoreboard, even as Australia's daily Covid-19 cases topped 100k for the first time on record, while iron ore futures retreated on fears surrounding demand from China in light of the community outbreak of Omicron there. A beat in Australian building permits helped the local currency extend gains, while a BBG trader source pointed to additional support from exporter demand. AUD/USD rose past Friday's peak but struggled to take out the $0.7200 mark.

• The broader high-beta FX space traded on a firmer footing amid an apparent improvement in sentiment, with participants still trying to forecast the Fed tightening path. The monthly CPI report, due out of the U.S. on Wednesday, may provide a notable data input.
• Liquidity was thinned out and market activity was limited by a public holiday in Japan. The yen weakened, with USD/JPY recouping the bulk of losses registered last Friday.
• Spot USD/CNH edged lower, even as Tianjin reported China's first community transmission of the Omicron coronavirus variant, while the PBOC set their yuan reference rate 14 pips above sell-side estimate.
• EZ unemployment, Norwegian CPI & final U.S. wholesale inventories headline the thin global data docket today. The central bank speaker slate is virtually empty.